Owner of Provincial Real Estate Administrative Services Pleads Guilty to Mortgage Fraud Related to Short Sales | LoanSafe

Owner of Provincial Real Estate Administrative Services Pleads Guilty to Mortgage Fraud Related to Short Sales | LoanSafe:

'via Blog this'According to the plea agreement, in addition to reverse staging, Howard also engaged in an illegal scheme known as commission shifting, whereby realtor commissions that should have been borne as an expense in the resale transaction were paid as part of the short sale transaction. The shifting of these costs, from the resale to the short sale, resulted in the short sale lender bearing realtor commission costs that should have been borne by Howard. This resulted in a higher profit to Howard, to the detriment of the short sale lender. Howard illegally obtained $219,414.52 during the short sale flipping of 13 properties in Brevard County. 

According to the plea agreement, between November 2007 and August 2011, Howard operated an illegal real estate short sale flipping business, Provincial Real Estate Administrative Services Inc. (“Provincial”). Using Provincial, Howard made properties appear to be in poor condition during appraisals, through a scheme known as reverse staging. Reverse staging is a process wherein someone manipulates the short sale price by intentionally downgrading a property’s appearance and falsely representing the condition of a property in advance of bank appraisals. Reverse staging is done in an effort to acquire the property at below market price. In this case, it included Howard removing receptacle plates and pulling wires from the walls to falsely represent to an appraiser that the house required rewiring, electrical service upgrades, and repair work. In some instances, it also involved spraying the house with a foul-smelling prank product and falsely representing to an appraiser that the odor was due to mold or other potential biohazard issues that required expensive remediation costs. The reverse staging effectively caused the lender to agree to the below market offer made by Howard through Provincial. The property was then immediately resold at a profit.